Floss­ing de­vice suf­fers from slip­ping sales

Af­ter los­ing big-name clients, fam­ily-run busi­ness look­ing for new growth in the U.S.

Toronto Star - - BUSINESS - > THIS WEEK’S CASE STUDY BARB GORM­LEY SPE­CIAL TO THE STAR

It is ev­ery man­u­fac­turer’s nightmare: a long­time multi-store client un­ex­pect­edly delists your prod­uct and swipes it off the shelf.

It hap­pened to Ira Florence. But the way he tells it, his sit­u­a­tion is no run-of-the-mill nightmare — it is a full-blown hor­ror story.

“My rev­enues time­line looks like the rise and fall of a roller coaster at Canada’s Won­der­land,” says Florence, owner and pres­i­dent of Con­cord, Ont.-based Sul­cabrush, the man­u­fac­turer of a tooth­brush-like floss­ing de­vice.

So far, Sul­cabrush is hang­ing on to its smaller clients — a mix of den­tists, in­de­pen­dent drug stores and a dis­count depart­ment store. But Florence needs to find new growth op­por­tu­ni­ties to rebuild the com­pany’s cus­tomer base.

Up un­til 2004, busi­ness was boom­ing. Sul­cabrush was in ev­ery Shop­pers Drug Mart out­let, as well as 4,500 Wal­greens and 4,500 CVS Phar­macy stores in the U.S. It was also sup­ply­ing about 8,000 Cana­dian and U.S. den­tal of­fices and sell­ing 1,000 units per month to small in­de­pen­dent drug stores.

Then the drop be­gan. CVS left in 2004, Wal­greens in 2005 and Shop- pers Drug Mart in 2011. In early 2014, a dis­count depart­ment chain (which he prefers not to name be­cause they’re still a client) cut Sul­cabrush from 120 of its 240 stores.

All three drug chains re­placed Florence’s prod­uct with what he calls “cheap off­shore knock-offs.”

As the busi­ness be­gan un­rav­el­ling, Florence down­sized his staff of 17 to one loyal em­ployee. (A $2-mil­lion man­u­fac­tur­ing au­to­ma­tion project, that was just wrap­ping up, made this pos­si­ble.)

The losses sent Sul­cabrush to the brink of bankruptcy, and it has only just stead­ied it­self fi­nan­cially in the last two years.

The Sul­cabrush was in­vented 29 years ago by Florence’s den­tist fa­ther for his pa­tients who found floss­ing messy and in­con­ve­nient. Florence took over the busi­ness in 1986 at age 24.

Us­ing mar­ket­ing skills honed while work­ing in the re­tail cloth­ing busi­ness and reap­ing the ben­e­fits of the then-weak Cana­dian dol­lar, Florence steadily built the busi­ness. Rev- enues grew by $250,000 per year from 1991 to 2003, peaked at $3 mil­lion in 2003 and have since lev­elled out to about $1 mil­lion in 2013. The com­pany’s big­gest loss has un­doubt­edly been Shop­pers Drug Mart. Florence says the mega chain pulled the plug on the 15-year re­la­tion­ship by, one month, sim­ply not plac­ing its reg­u­lar $30,000 to $40,000 monthly or­der (though the buyer in­sisted she in­formed him of the delist­ing by email, says Florence). Hav­ing just fin­ished pay­ing a com­pul­sory $18,000 mar­ket­ing fee, Florence thought his fu­ture with his big­gest client was solid. Not so. “They squeezed us for ev­ery last drop of money they could,” Florence says. (Shop­pers Drug Mart de­clined to com­ment on specifics, but says, “Ven­dor ne­go­ti­a­tions are pro­pri­etary in na­ture. We are al­ways re­view­ing the per­for­mance of brands and prod­ucts within our stores to en­sure we have the right se­lec­tion for our cus­tomers.”) Den­tal of­fices are now the lifeblood of his busi­ness, so Florence dropped the whole­sale price for this group by 29 per cent to en­cour­age new clients. He also beefed up his an­nual mar­ket­ing and ad­ver­tis­ing budget to $200,000. Over the years, he has pro­duced two tele­vi­sion com­mer­cials, the lat­est which will air this spring on the On­tario TV list­ings chan­nel. To­day, Florence has no in­ter­est in work­ing with drug­store chain clients. “They get tired of older items and just want new, new, new,” he says. Tri­cia Ryan, a Toronto mar­ket­ing con­sul­tant who has spe­cial­ized in the con­sumer pack­aged goods den­tal field for 15 years, says that com­pe­ti­tion for re­tail shelf space is in­creas­ingly fierce. “If a re­tailer can ob­tain a $100,000 list­ing fee from a new prod­uct that is per­ceived as more in­no­va­tive or cheaper, why wouldn’t they?” says Ryan. “Re­tail­ers are con­stantly look­ing for brands that will cost them less and make them more money while sat­is­fy­ing con­sumer needs and wants.”

As for hir­ing a mar­ket­ing con­sul­tant or re­fresh­ing his prod­uct, Florence dis­misses both strate­gies, though a mi­nor pack­age re­design is planned for 2015. “No one knows this busi­ness like I do, and the Sul­cabrush de­sign is per­fec­tion,” he says.

In­stead, Florence is pin­ning his com­pany’s fu­ture on two mass sam­pling cam­paigns di­rected at the huge Amer­i­can den­tal mar­ket. He is send­ing 5,400 Amer­i­can pe­ri­odon­tal of­fices and 3,600 Amer­i­can den­tal hy­gien­ists each a box of sam­ples (at a ship­ping cost of about $13 per pack­age). Each cam­paign will wrap up just be­fore two large Amer­i­can den­tal con­fer­ences where his com­pany will be ex­hibit­ing at the trade shows.

Florence is count­ing on the den­tal pro­fes­sion­als and their pa­tients to fol­low up with him to or­der.

“Will it work?” he asks. “I don’t know.”

He ad­mits there are two ma­jor stum­bling blocks to his mar­ket­ing strat­egy: Many den­tists strongly re­sist mov­ing away from tra­di­tional den­tal prod­ucts.

As well, the ma­jor­ity of them dis­like re­tail­ing and in­stead di­rect pa­tients to drug stores, he says — but no U.S. re­tail­ers cur­rently sell the Sul­cabrush.

He re­mains a zeal­ous pro­moter of his fa­ther’s in­ven­tion.

“My hope is to find more den­tists who want to pur­chase the best prod­uct that will help their pa­tients com­bat gum dis­ease,” he says.

NICK KOZAK FOR THE TORONTO STAR

The Sul­cabrush — a tooth­brush-like de­vice for floss­ing — was in­vented 29 years ago by Ira Florence’s fa­ther.

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